Mohib -Final-2

8/7/2019 Mohib -Final-2

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Introduction:

Bangladesh is a developing country. Today necessity of Bank as a

financial institution is undeniable. Banking industry is the mostgrowing sector in the economy of Bangladesh. Both Islamic Bankand interest based conventional banks invest their money to earnprofit. But they differ in the manner of operation. The operation ofIslamic bank is regulated by Islamic principles, while the activities ofconventional banks are controlled by general banking rules andregulation.

Bangladesh is one of the largest Muslim countries in the world. Thepeople of this country are deeply committed to Islamic way of life as

enshrined in the Holy Qur'an and the Sunnah. Naturally, it remains adeep cry in their hearts to fashion and design their economic lives inaccordance with the precepts of Islam. We have been experiencedwith banking from very ancient period. To say bank we simple meanan institution, an intermediary whose duty is to take deposit andgiving loan who is in need and demand. And through this processearn interest.

Today banking has become the most essential parts of our life andthe central driving force of every economy. It turns as the heart of

the economy of each country. Most of the financial transactions arenow being made through the bank. Worldwide banks have becomethe center points of the economy and Bangladesh is not anexception. So, Banks are playing vital role in our economy.

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1.1.1 Origin of the Study:

All over the world the dimension of banking has been changingrapidly due to deregulation, technological innovation andglobalization. Now banks must compete the market-place both withlocal institution as well as foreign ones. To survive in thiscompetitive banking world banks require to develop appropriatefinancial structure, develop professionalism in the sense ofdeveloping appropriate manpower structure and expertise andexperience.

As per requirements of the MBA program offered by Faculty ofBusiness Studies, University of Dhaka under the Department ofMarketing we the student has to undergo a Internship program andprepare a Report on the topic selected by myself under thesupervision of my honorable supervisor Mrs. Dr. Razia Begum,Professor, Department of Marketing, University of Dhaka. I ampreparing this Report from few practical experiences and with thehelp of different books, Annual report, Journal, Web Site and directsupervision of my honorable supervisor.

1.1.2 Objectives of the study:

Any study should be based on and supported by objectives. As amatter of fact in this study have specific objectives. The primaryobjective of the study is to meet the requirements for the fulfillmentof the course practical orientation in any commercial Institution orOrganization. From those organizations I have chosen Banks. Thecore objectives of the practical orientation program in Banks are asfollows-

To Analyze Investment Procedures of Shahjalal Bank Limited(SBL)

To Analyze Islamic Shariah and Investment of Shahjalal Bank

Limited (SBL) To Identify the Problem of Shahjalal Bank Limited (SBL)

To Identify Prospect of Shahjalal Bank Limited (SBL)

1.1. 3 Methods of the Study:

i) Population and SampleIn Bangladesh there are an average number of 50 Public and

PrivateBanks to be found to operate. Among them Shahjalal Bank

Limited (SBL)Rajshahi Branch has been selected for the study.

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ii) Procedure of the information collection

In order to make the Report more meaningful and presentable;two types of data & information have been used widely. Theseare as-

Data Sources

Primary sources Secondary sources

1. Primary Sources:

The primary Sources are as follows-

Practical work exposures on the different desks speciallyinvestment of the branch

Face to face conversation with the respective officers in thebranch.

Informal conversation with the clients.

2. Secondary Sources:

The secondary Sources of data are as follows-

Annual report (2009) of Shahjalal Bank Limited(SBL)

Brochures of Shahjalal Bank Limited( SBL)

Relevant file study as provided by the officers.

BIBM text Book

Periodicals published by Bangladesh Bank. Internet is used as a theoretical source of information.

Different publications regarding banking function, foreignexchange operation and credit policies.

Other necessary books & materials.

1.1. 4 Limitations:

A good Report sells the results of the study, but it should notoversell.

Every project has limitation.

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Time was inadequate.

Inadequate data sources.

Faced usual constraints during the course of my PracticalOrientation.

2.1 Islamic Banking in Bangladesh and the World

2.1. 1 Banking Services in Bangladesh:

Services are going to move in this decade to being the

front edge of the Industry.

Normally, Services are Activities, benefits, or satisfactions which areoffered for sale, or are provided in connection with sale of goods.

All of the following companies are considered services companies.

Banks (Financial Services)

AT & T(Telecommunications)

Bangladesh Airlines(Transportation)

Salt

Soft drink Fast Food

Detergent Automobile CosmeticsIntangible

Dominant

Tangible

Dominant Advertising

Agencies Airlines

Fast FoodInvestment Mgt

Consulting

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Since early British rule the history of banking in Bangladesh territoryshow that the traditional trade networks developed before the banksinvaded rural areas. And the banking services have slowly flourished

in Bangladesh territory. Even 90 days, in many places money-lenders provide credit services. Small shopkeeper and businessmenuse informal credit at high interest rate.

2.1. 2 Public Sector Banks:

During the liberation war in 1971 the economic, political, and socialsystem lending the banking system were severally damaged. At thattime, all big and medium financial institutions except two smallbanks had their head office in the West Pakistan. The non-Bengaliowner and manager of the financial establishment that operated inEast Pakistan had abundant them. After independent the then newgovernment had to take over management and ownership of all

such institutions. The Bank nationalization order 1972 was issued.By several order six nationalized commercial banks, one industrialbank, and one industrial development financial institution werecreated.

2.1. 3 Private Commercial Banks:

Taking advantage of the liberalization policy of the governmentregarding participation of private sector in the banking business, anumber of private sector banks were established in and after 1993.With the emergence of private banks in Bangladesh, a competitive

situation in the sector has been created. Now there are manyprivate banks working in our country. These private sector banksalso include some foreign banks. The state bank of India opened onebranch during July- September 1975. In 1975, the four foreign banksoperating in Bangladesh were-

American Express International banking corporation,

Citi N.A.

Standard chartered bank and

State bank of India.

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Now there are thirteen foreign foreign banks & Thirty five localbanks are working in our country.

2.1.4 Islamic banking movements through out the World:

The expansion and unfolding of Islamic banking along withtraditional interest based banking is a recent phenomenon. Islamicbanking is an inseparable part of Islamic economy. During thefifties it was only a subject of research and was limited to thewritings of scholars and philosophers. During the sixties actualexperiments institutions started gaining strength. The eighties andnineties are the period of consolidation and now Islamic bankingis coming up as the welfare banking system of the modern world.

There has always been a desire to establish financial institutions tooperate as per the tenets of Islamic Shariah. A successful Islamicbanking venture in Myt Gamr, Egypt was established in 1903.

Subsequently, Islamic banking movement achieved steadyprogress and assumed significant dimension and role with theestablishment of the Nasser Social Bank in1972, Dubai Islami Bankin 1975, Islamic development bank in1975, Faysal Islami Bank in

Egypt and Sudan in 1977. Emergence of the Islamic developmentBank as an international Islamic Financial Institutions with a view toinvolving all the Islamic countries in the establishment of Islamicbanks and financial institutions was considered as a milestone in thehistory of Islamic banking.

Till now more than 300 Islamic Banking and financial institutions inabout 50 countries of Asia, Africa, Europe, America and countrieslike U.K, U.S.A, Germany, Argentina, Denmark, Luxembourg, Switzerland and India have been established. The banking system ofPakistan and Iran was islamised and that of Sudan has been totally

remodeled with Islamic Shariah.

2.2 History of Islamic Banking System and Shahjalal BankLimited

[2.2. 1 Historical Background of Islamic bank in Bangladesh:

In August 1974, Bangladesh signed the charter of IslamiDevelopment Bank and committed itself to reorganize its economicand financial system as per Islamic Shariah.

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In January 1981, the then Present of Peoples Republic ofBangladesh while addressing the 3rd Islamic Summit Conferenceheld at Makkah and Taif suggested, The Islamic countriesshould develop a separate banking system of their own in order tofacilitate their trade and commerce.

This statement of the president indicated favorable attitude of thegovernment of the peoples republic of Bangladesh towardsestablishing Islamic Banking in our country.

Earlier in November 1980, Bangladesh Bank sent a representative tostudy the working of several Islamic banks abroad.

In November 1982, a delegation of IDB visited Bangladesh andshowed keen interest to participate in establishing a joint ventureIslami bank in the private sector. They found a lot of work hadalready been done and Islamic banking was in a ready form forimmediate introduction.

Two professional bodies of Islamic Economics Research Bureau andBangladesh Islamic Bankers Association made significantcontributions towards introduction of Islamic banking in the country.

They came forward to provide training on Islamic banking to topbankers and economists to fill- up the vacuum of leadership for thefuture Islamic banks in Bangladesh. Their professional activitieswere reinforced by a number of Muslim entrepreneurs workingunder the aegis of the then Muslim Businessmen Society. The bodyconcentrated mainly in mobilization of equity capital for the

emerging Islamic bank.

At last, the long drawn struggle of The Shahjalal Bank Limited wasincorporated as interest free Shariah Based Commercial Bank inBangladesh as a Public Limited Company with limited as on 1st dayof April, 2001 under Companies Act 1994 and commencedcommercial operation on the 10th day of May 2001. It has 10(Ten)Branches all over Bangladesh. Shahjalal Bank Limited has alreadypassed 2nd Year of its operation successfully.

Now we have number of Islamic Bank like Shahjalal Bank Limited,Islamic Bank Bangladesh Limited, Al Baraka Bank limited (recent

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The Oriental Bank), Social Investment Bank, Al Arafa Bank and someportion of Prime Bank.

2.2. 2 Defining an Islamic Bank:

The concept of Islamic Banking is a very recent innovation to thebanking world. At the beginning the world was not familiar withIslamic Banking.

In the very recent stage banking system was only understood ascapitalist system based on interest. Islamic Banking systememerged with its unique feature of interest free system. The focalpoint around which Islamic Banking system revolved is the straightdeparture from interest.

According to OIC, Islamic Bank is a financial institution whosestatutes, rules and procedures expressly sate its commitment to theprinciples of Islamic Shariah and to the banning of receipt andpayment of interest on any of its operations.

In the April of 1978 this definition was approved in the conference offoreign ministries of Muslim countries held at Dakar, Senegal.

2.2. 3 Elements of Islamic Bank:

1. Prohibition of Interest:

The traditional capitalist banking system depends on interest. Itreceives interest for providing loans and pays interest for takingloans. The spread between these two interests is the source of itsprofit. But according to Islamic Shariah all types of interest isbanned. Islamic Bank does not carry on business of interest and itcompletely avoids the transaction of interest.

2. Investing in Halal Business:

Islamic Shariah has banned the business of haram goods. Forexample Islam not only forbids the drinking of alcohol but alsobanned the business of alcohol/ therefore Islamic Bank does not getany harem business and only do halal business.

3. Investment Based on Profit:

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After departing from interest, the alternative ways of income forIslamic Bank are investment and profit. Thus Islamic Bank gives upof any transaction of interest and makes investments based onprofit. Bank distributes its profit to its depositors and shareholders.

4. Halal paths and procedures:

Islamic Shariah also rejects any haram path or process in case of ahalal business. Therefore Islamic Banking system only allows thehalal path and procedures of halal business.

2.2. 4 Features of Islamic Banking system:

1. Prohibition of interest.2. Investment based on profit.3. Investing in halal business.4. Halal paths and procedures.5. Islamic Bank and customer relationship.6. Islamic Bank follows cash based account system.6. It is a multi purpose bank.7. Islamic Bank does not create any credit.

2.2. 5 Goals of Islamic Bank:

To establish participatory banking instead of banking ondebtor-creditor relationship.

To conduct interest-free banking.

To invest on profit and risk sharing basis.

To eliminate riba.

To establish Baiya. (Trade Commerce and Industry)

To ensure equitable distribution of income and wealth. To safeguard the excess money lying idle in the hands of

customers.

To contribute in achieving the ultimate goal of Islamiceconomic system.

To establish balances trade and welfare.

To develop human resources and self-assessment.

To create more employment opportunities by increasingeconomic activities

To extend co-operation to the poor, the helpless and the low-

income group for their economic up liftment. To mobilize savings for productive purpose.

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3.3 History ofShahjalal Bank Limited (SBL)

The emergence of Shahjalal Bank Limited (SBL) was at the junction of liberalization of global economic activities. Shahjalal

Bank Limited (SBL) is a private Islamic Shariah based bank whichis found on the established & emerging markets of Bangladesh. TheShahjalal Bank Limited was incorporated as interest free ShariahBased Commercial Bank in Bangladesh as a Public Limited Companywith limited as on 1st day of April, 2001 under Companies Act 1994and commenced commercial operation on the 10 th day of May 2001.It has 10(Ten) Branches all over Bangladesh. Shahjalal Bank Limitedhas already passed 2nd Year of its operation successfully. Theorganizational Structure and Corporate governance of ShahjalalBank Limited is to establish-

a Strong,

Customer oriented and Transparent Management Within about five minutes of

inception of Shahjalal Bank Limited could attain breakevenposition.

3.3. 1 Vision of Shahjalal Bank Limited:

To provide quality service to the customer,

To set high standard of integrity,

To extend its customers innovative services acquiring state-of-the-art technology blended with Islamic principles and

Bring total satisfaction to its clients, sponsors and employees.

3.3. 2 MissionShahjalal Bank Limited:Every organization has specific mission. My selected organizationShahjalal Bank Limited also has its mission. Mission of SBL is as

follows:

To expand Islamic banking through welfare oriented bankingsystem,

To ensure equity and justice in economic activities,

To extend financial assistance to poorer section of the peopleand

To achieve balance growth & equitable development.

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Rajshahi Branch of Shahjalal Bank Limited has much contribution ofthe Economy of Bangladesh. The corresponding address of thisBranch is-

3.3. 3 The Organization Structure:

Objective

The objective of the Organizational Structure and Corporategovernance of Shahjalal Bank Limited is to establish a strong,customer-oriented and transparent Management.

Board of Directors The Board of Directors consists of 19 members. The Board ofDirectors is the apex body of the bank.

Board CommitteesThe Board responsibility of each committee is determined by theBoard of Directors who also decides on the composition of eachcommittee.

Executive Committee

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Chairman: Mr. anwer Hossain KhanVice Chairman: Al-haj Mohammad HasanAll routine matters beyond delegated powers of management aredecided upon by or routed through the Executive Committee,subject to ratification by the Board of Directors.

Policy CommitteeChairman: Al-haj Md. Abdul MannanVice Chairman: Mr. Mohammad Towhidur RahmanAll matters relating to the principles, policies, rules and regulations,ethics etc. for operation and management of the Bank arerecommended by the Committee to the Board of Directors.

3.3. 4 Board of Director:

Chairman

Mr. Sajjatul Jummah.

Directors

Mr. Anwer Hossain Khan.Al- haj Mohammad FaruqueAl-haj Tofazzal Hossain.Electra International Ltd.Represented by Mr. Md. Sanaullah.Samsuddin Khan & Harun Miah Ltd.Represented by Al-haj Samsuddin Khan.

Al-haj Mohammad Faruk.Al-haj Mohammad Hasan.

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Al-haj Md. Abdul Mannan.Al-haj Abdul Barek.Mr. Md. Soliman.Al-haj Syed Nurul Arefeen.Al-haj Abdul Halim.

Al-haj Mohiuddin Ahmed.Al-haj Akkas Uddin Mollah.Mr. Khandoker Sakib Ahmid.Mr. Mohammad Touhidur Rahman.Mr. A.K. Azad.Al-haj Mohammad Younus.

Managing Director

Mr. Matin Uddin Ahmed.

Company Secretary

Mr. Quazi Maswoodul Haque

3.3. 5 Corporate Information:

First meeting of the promoters held on : 04.09.2000.Date of Certificate of Incorporation : 01.04.2001.Date of Certificate of Commencement of Business: 01.04.2001.First meeting of Board of Directors held on : 24.05.2001.Banking License received on : 18.04.2001.First Branch License received on : 24.04.2001.Inauguration held on : 10.05.2001.Authorized Capital :Tk. 800.00 millionPaid up Capital : Tk. 205.00 million Total Number of Sponsor Directors : 19Number of the Branches : 10Auditors :Howladar Yunus & Co

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Registered Office : Jibon Bima Bhaban

Front Block, (6th Floor)

10, Dikusha C/A

Dhaka-1000

3.3.6 Shariah Council:

As per Article 30 of the Articles of Association of the Company anIslamic Shariah Council for the bank has been constituted. TheCouncil plays a vital role in advising and guiding on theimplementations and compliance of Shariah principles in allactivities of the Banks particularly on the modes of Investment. TheCouncil, which enjoys a high status in the structure of the Bank,consists of prominent ulema, reputed banker, renowned lawyer andeminent economist.

The Board of Directors expresses its deep gratitude to AlmightyAllah for enabling the Bank to achieve considerable progress withinthe first eight months of its inception at the end of the year2001.The Board extends to the Ministry of Finance, BangladeshBank and the Government Agencies for providing assistance,guidance, support and cooperation at various stages of operations

of the bank.

Shariah Council of the Bank is playing a vital role in guiding andsupervising the implementation and compliance of Islamic Shariahprinciples in all activities of the Bank since its very inception.

Members of the Shariah Council meet frequently and deliberate on

different issues confronting the Bank on Shariah matters. They alsoconduct Shariah inspection of branches regularly so as to ensure thatthe Shariah principles are implemented and complied with meticulouslyby the branches of the Bank.

Serialno

Name Address Designation

1 Dr. Md. Mustafizur Rahman

Vice Chancellor, IslamicUniversity,Kustia

37/B, Fuller Road

Dhaka-1000.

Chairman

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2 Mr. Mohammad Monsur AlHaque

Prfessor, Islamic Studies,Salimullah College

65/B, NawabKatraLane,Nimtoli

Dhaka-1100.

Member

3 Mr. Yusuf Abdul Majid

Khatib, Tara Mosque

8, Abul KhairatRoad, Armanitola

Dhaka

Member

4 Mr. Mohammad AbdusSamad

Teacher, MadrasatulHadis

32, BangshalRoad,

Dhaka-1100.

Member

5 Mr. Mohammad Abdur RashidChowdhury

Economist

174,New Poltan,Azimpur,Lalbag,

Dhaka-1205

Member

6 Mr. Mr. Sajjatul Jummah

Chairman, Shahjalal BankLimited

Jibon BimaTower, FrontBlock,(6th Floor)

10, DikushaCommercial Area

Dhaka-1000.

Mr. SajjatulJummah

7 Mr. Matin Uddin Ahmed

Managing Director,Shahjalal Bank Limited

Jibon Bima

Tower, FrontBlock,(6th Floor)

10, DikushaCommercial Area

Dhaka-1000.

Secretary

3.1 Investment Procedures of Shahjalal Bank Limited

The Investment activities continued to be at a low level. There waslow demand for credit, leaving significant surpluses in thebanking sector. There was a sharp increase in Governmentborrowing caused by insufficient revenue collection & increasedexpenditure. Investment Procedures of SBL includes the followingaspects.

3.1. 1 Investment/Credit Division:

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A. Name & Address of the client: M/S. ABC Enterprise

Proprietor: Mr. MMM

11, Munnu Nagar, Gazipur

B. Details of the facility:

a Type of Investment

: Bai-Muazzal (Commercial)

b Amount of Investment

: Tk.4 5.00 Lac (Taka Forty Five Lac)only

c Validity/ Expiry : 31/05/2004d Purpose : To meet working capital requirement

for production and wholesale business

of different enamel products.e Rate of Profit : 15.50% p.a. simplef Mode of

Disbursement: Disbursement will be made directly to

the suppliers of goods to bepurchased under Bai- Muazzalinvestment limit through PO/DD uponwritten request by you.

g Mode of Repayment

: Partially or at a time from saleproceeds or from other sources butfull adjustment shall have to be madewithin the validity period of each Bai-

Muazzal deal.h Security : As stated in the collateral & control

column below:

C. Collateral & Control:

1. Hypothecation of stocks in trade duly insured covering the perilsof Fire, RSD, and Flood & Cyclone incorporating Banks mortgageclause in the policy.

2. Registered mortgage (already created) of:

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h. All legal fees, insurance premium and other expenses shall beborne by you.

i. All terms and conditions of Bai- Muazzal agreement must becomplied with.

j. Incase of your failure to pay the sale price of the goods with entiredues within expiry date you shall be liable to pay compensation tothe bank at the calculated rate of profit / return from the date ofinvestment becoming overdue.

k. Investment will be allowed by ensuring actual buying and selling,supervision of end use, disposal & deposit of sale proceeds with thebranch towards adjustment of the Bai- Muazzal Investment account.

l. You will not divert any sale proceeds of goods against BanksInvestment under any circumstance.

m. Quality, quantity, prices, and storage of Bai- Muazzal goods shallbe ensured by the branch.

n. Stock reports must be submitted on a monthly basis andinspection thereof should be conducted by the branch officials atregular intervals.

o. The Bank reserves the right to alter/amend any of the aforesaid

clauses/terms and call bank the entire or part of the Investmentfacilities at any time without assigning any reason whatsoever.

p. A signboard with the inspection that The property isencumbered with Shajalal Bank Limited, Mitford Branch,Dhaka. Should be displayed in a prominent manner onmortgaged property.

E. Charge Documents to be executed by you.

If the above terms& conditions are acceptable to you, please the

duplicate copy of the sanction advice must be returned to us dulysigned by you as a token of your acceptance of the terms &conditions outlined therein.

Thanking you

Yours faithfully,

..

Senior Vice President

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Letter of Hypothecation

Bai-Muazzal Agreement.

Murabaha Agreement.

Purchase Schedule.

Letter of Revival

Memorandum of Deposit of Title Deeds.

Letters of Guarantee.

Deed of mortgage duly registered with the concerned Sub-

Registrars office.

These are the simple consideration of Banking Industry. Thebusiness of lending, nevertheless, is not without certain inherentrisks. Largely depending on the borrowed funds a banker can notafford to take undue risks in lending. While lending his funds, abanker, therefore, follows a very caution policy and conducts hisbusiness on the basis of the well-known principles of sound lending

in order to minimize the risks.

The principle of sound lending that is followed in the bankingindustry is common to all conventional and unconventional interestfree banking system. Some of the principles are given as follows:

1. Safety: By safety is meant that the borrower is in a position torepay the loan, along with interest, according to the terms of theloan contract. The repayment of the loan is depends on theborrowers capacity to pay and willingness to pay. The former

depends on his tangible assets and the success of the business. Thewillingness to pay depends upon the honesty and character of theborrower.

2.Profitability: Commercial banks are profit-earning institution. Sothey must invest their fund in profitable sectors.

3. Liquidity: Bankers are essentially financial intermediaries forshort-term funds. The banker must ensure that the borrower is ableto repay the loan on demand or within the short period of time.

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To give chances to the limited earning people to buyhousehold products.

To give chances to service holders to lead an honestand better life.

To help the people who have limited earnings toimprove their living standards.

Types of Household products:

Refrigerator/deep fridge, TV, radio/ two-in-one/three-in-one,motor cycle/by cycle, air cooler/air conditioner, pc, washingmachine, furniture, sewing machine, oven, toaster, blender,pressure-cooker, I.P.S., UPS, power generator, motor pump/powerpump, CI sheet, rod, wood, jewelries, deep pump, mobile phoneset, instruments of medical and engineering students,educational instruments, books, etc which are counted asnecessary households.

Investment Method:

Bai-Muajjal.

Proposal for Sanction of Investment facility under HouseholdDurable Scheme (Hypothetical Specimen)

01

Applicant Name : Mr. MMMMM, S/o. Late IIIIII.

02

Position Status(withaddress)

: Proprietor: M/s. PPPPPP

M-3/2 NNN Mansion Super Market(2nd Floor)

Shahid Janani Jahanara Imam Sharani,Dhanmondi,Dhaka

Tel: 8619539

Res: 43,Haji Abdul Hai Road,Jigatola,Dhanmondi,Dhaka

Tel:018-294542

03

Age(as on applicationdate)

: 35 (Thirty Five) Years

04

Monthly Income : Tk. 60,000.00

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The help of this scheme can achieve the followings:

Alleviation of poverty, unemployment and their badimpacts might be possible.

New employment opportunities might be created forunemployed youths.

Establishing small businessman and entrepreneursand increasing productivity can extend localproducts market.

By forming capitals, the living standard of smallbusinessman and entrepreneurs living standards canbe improved.

Objectives and Goals:

Extending investment to increase the earnings andthereby improve the living standards of smallbusinessman and entrepreneurs of cities, small townsand of rural areas.

To extend investment facilities among those whohavent got any financial help from banks or from otherfinancial institutions and who are being deceived.

To insist unemployed youths to become entrepreneurs,and to make them self established, and to participate in

social welfare.

Methods of Investment:

A. Hire Purchase Under Shirkatul Meelk: for all kinds ofequipments and transportation sectors

B. Bai-Muajjal (TR): stores, agricultural processingand raw materials used in production.

3. Term Loans

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Medium and long-term loans are usually called Term Loans.These loans are granted for more than a year and are meantfor purchase of capital assets for the establishment of newunits and for expansion or diversification of an existing unit.

4.Real State Investment Scheme:

Under this scheme, professionals other than those under HousingSchemes will be given opportunities to take banks investmentfor construction of houses, repairs and extensions, constructionof business centers/ stores, construction of apartments/flats (asworking capital) or for any other commercial real state financing.

5. Transport Investment Scheme:

Under this scheme, investment facilities are provided amongexperienced and successful businessmen and to new qualifiedentrepreneurs to purchase transports. Moreover, transports aregiven to various multinational companies and to solvent serviceholders on the basis of rent with opportunities to become owner.

Goals and Objectives:

To provide help in developing the transportation system

of the country

To help eliminate the transportation problem

To help service holders and professionals to purchasetheir own vehicles and thus to develop theirprofessionals and living standards

Types of Transports:

Road Transportation:

Private car, micro bus, jeep

Bus, truck, mini Bus

Auto-rickshaw, tempo, pick-up-van

Target Group:

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Private car/micro bus/ jeep:

o Permanent officers of government, semi-government, autonomous corporations, banks andother financial institutions.

o Established businessman and business firms

o Defense personnel

o Professionals: university teachers, doctors,engineers.

o Individuals/firms currently involved intransportation (Rent-A-Car) business or interestedto.

Bus/truck/mini bus:Individuals/businessmen/organization involved intransportation business and potentialindividuals/businessmen/organization willing totake transportation as profession.

Auto rickshaw/tempo/pick-up-van:Those who have already shown success in thisfield and those who have capability andwillingness to take small transportation businessas profession can apply for the above vehicles.

Investment Method:

Hire purchase Under Shirkatul Meelk.

6. Small Industry Scheme:Shahjalal Bank Limited is participating in the investment inindustrial sectors of the country. To extend its invested inindustrial sector; the Bank has opened this scheme to itsvarious branches.

Objectives:

Creating employment by establishing new industries,restarting old industries by financing

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No profit is provided or received for the depositors of this account.But at a due rate the depositors must bear government taxes andother charge.

2. Mudaraba Special Notice Account:

Any company, business entity, department of the government,organization and trust or any person can open this account.

This account is operated under Mudaraba principle.MMMMMMMMMMMMMMM

Any amount can be withdrawn or transferred to Al-Wadiah currentaccount or any other accounts after placing a notice of seven days.

Cheque books are provided for these accounts.

Because of the facility of withdrawing money at short notice. Theprofit is comparatively lower for this account.

3) General Mudaraba Deposit or Account / Mudaraba SavingsAccount:

Mechanism is almost similar to the savings account of theconventional banks. The basic difference in this case is that thebank and the owner of the fund will share the profit from the

investment while the loss from the investment will be borne by theowner of the fund unless the loss is incurred due to the negligenceor convenience of the bank.

Features of Mudaraba Savings Deposit:

To open this account a minimum amount of Tk.100 is required. Thisaccount is operated under Mudaraba principle. Here the bank isMudarib and depositors are Shahib Al-Mal. Checkbooks are providedfor this account.

From this account money can be withdrawn four times a month andin each time one-fourth of the deposit or Tk.15, 000 whichever islower can be withdrawn. For any amount greater than this a sevendays notice is required. The deposit is accounted for profit whenmoney is withdrawn with notice.

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SHARE MECHANISM

MudharabaMusharaka

1. BAI-MURABAHA:

Meaning and Definition:

The terms Bai-Murabaha have derived from Arabic words Bai andRibhun. The word Bai means purchase and sale and the wordRibhun means an agreed upon profit. Bai-Murabaha means saleon agreed upon profit. Bai-Murabaha may be defined as a contractbetween a buyer and a seller under which the seller sells certainspecific goods permissible under Islamic Shariah and the Law ofland to the buyer at a cost plus agreed profit payable in cash or anany fixed future date in lump sum or installments. The profitmarked-up may be fixed in lump sum or in percentage of the costprice of the goods.

Types of Bai-Murabaha:

There are different types of Murabaha as given below:

a. Ordinary Bai-Murabaha:

Ordinary Bai-Murabaha happens between the two parties, i.e. thebuyer and the seller, where the seller as an ordinary traderpurchases the goods from the market without depending on anyorder and promise to buy the same from him and sells those to a

buyer for cost plus profit, then the sell is called ordinary Bai-Murabaha. In this case, he seller undertakes full risks of his capitalinvested in the business with a view to earn profit out of selling thegoods purchased for.

b. Bai-Murabaha on order and promise:

It occurs between the three parties the buyer, the seller and thebank as an intermediary trader between the buyer and the seller,

where the bank upon receipt of order from the buyer with

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specification and a prior outstanding promise to buy the goods fromthe bank, purchases the ordered

goods and sells those to the ordering buyer at a cost plus agreedprofit, the sale is called Bai-Murabaha on order or promise,generally known as Murabaha. In this case, capital with profit isalmost secured by promise.

2. BAI-MUAzzAL


The terms "Bai" and "Muajjal" have been derived from Arqabic

words and the word means purchase and sale and the word means

a fixed time or a fixed period. "Bai-Muazzal" means sale for which

payment is made at a future fixed date or within a fixed period. In

short, it is a sale on Credit. Bai-Muazzal may be defined as a

contract between a Buyer and a Seller under which the Seller sells

certain specific goods (permissible under Shariah and Law of the

Country), to the Buyer at an agreed fixed price payable at a certain

fixed future date in lump sum or within a fixed period by fixed

installments. The seller may also sell the goods purchased by him as

per order and specification of the Buyer.In this Bank, Bai-Muazzal is

treated as a contract between the Bank and the Client under which

the Bank sells to the Client certain specified goods, purchased as

per order and specification of the Client at an agreed price payable

within a fixed future date in lump sum or by fixed installment Thus it

is a credit sale of goods by which ownership of the goods istransferred by the Bank to the Client but the payment of sale price

by the Client is deferred for a fixed period. It may be noted here that

in case of Bai-Muazzal and Bai-Murabaha, the Islamic Bank is a

financier to the Client not in the sense that the Bank finances the

purchase of goods by the Client, rather it is a financier by deferring

the receipt of the sale price of goods, it sells to the Client. If the

Bank does not purchase the goods or does not make any purchaseagreement with seller, but only makes payment of any goods

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The bank sell on parallel Salam commodity in the same kind as ithas previously purchased on first Salam without making onecontract depend on the other. The bank also has the option ofwaiting to receive the commodity and then sell it for cash ordeferred payment.

4. Istisnaa Sale:


Istisnaa sale is contract in which the price is paid in advance at thetime of contract and the object of sale is manufactured anddelivered later.

A manufacturer, artists craftsman may take orders, with or withoutadvance payment, to make articles he or hire labor to do say.

The majority of the jurists consider Istinaa as one of the division ofSalam. Therefore, it is subsumed under the definition of Salam. But

the Hanafie School of Jurisprudence makes Istinaa as independentand distinct contract. The jurists of the Hanafie School have givenvarious definitions to Istinaa same of which are: That it is contractwith a manufacturer to make the something and It is a contract ona commodity on liability with the provision of work. The purchaseris called Mustasnia contactor and the seller is called Sania makeror manufacturer and the thing is called Masnooa, manufactured,built, and made.

5. Musharaka (Partnership):


The word Musharaka is derived from the Arabic word shariahmeaning partnership. Islamic jurists point out that the legality andpermissibility of Musharaka is based on the injunctions of the HolyQuran, Sunnah and Ijma (consensus) of the scholars. It may benoted that Islamic bankers are inclined to use various forms ofSharikat-Al-Inan because of its built in flexibility. At an Islamic bank,a typical Musharakah transaction may be conducted in the followingmanner.

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One, two or more entrepreneurs approach an Islamic bank for thefinance required for a project. The bank, along with other partners,provides complete fianc. All partners, including the bank, have theright to participate in the project. They can also waive this right. Theprofits are to be distributed according to an agreed ratio, which

need not be the same as the capital proportion. However, losses areshared in exactly the same proportion in which the differentpartners have provided the finance for the project.

Musharakah may be of two types:

Permanent Musharakah

Diminishing Musharakah

a. Permanent Musharakah:

In this case, the bank participates in the equity of a company andreceives of an annual share of the profits on a pre-rate basis. Theperiod of termination of the contract is not specified. This financingtechnique is also referred to as continued Musharakah.

The contribution of the partners under this mode may be equal orunequal ratios of capital to establish a new income generatingproject or to participate in an established one, whereby eachparticipates owns a share in the capital structure permanently anddeserve his share of the profit income. Such a partnership originallyis intended to continue up to the dissolution of the company. Butone can sell his share in the capital to withdraw from the project.

b. Diminishing Musharakah:

Diminishing Musharakah is a special form of Musharakah, whichultimately culminates in the ownership of the asset or the project by

the client. It operates in the following manner. DiminishingMusharakah is an intention from the very beginning not to stay inand continue the partnership up to the liquidation of the company.The Islamic bank can give the other partner the right to purchaseportion of the bank in the ownership of the firm for full payment at atime or by installment basis as per agreement with the partner.

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Fifth,the Islamic banks do not have the legal support of the Central

bank in Bangladesh, do not have the necessary expertise and

trained manpower to appraise, monitor, evaluate an audit the

projects that are required to finance. As a result, they can notexpand despite having huge excess financial liquidity. The

implementation of an interest-free banking in Banking raises a

number of questions and potential problems which can be seen from

the macro and micro operational point of view.

A partial list of the issues confronting Islamic banks in Bangladesh

includes:

Financial Stability.

Lack of Unified Shariah Rulings.

Controlling and Supervision by the Central bank on the Basis

of Islamic Shariah.

Liquidity and Capital.

Valuation of bank Assets.

Lack of Capital Market and Interest-free Financial

Instruments.

Shortage of Supportive and Link Institutions.

New Banking Regulations.

Lack of Co-operation among the Islamic Banks.

Economics slowdown and Political Situation of the Country.

Absence of Infrastructure for International Islamic Trade

Financing.

Lack of Specialized Islamic Banks and Non-Bank financial

Institutions.

Lack of Inter-country Study on the practical Operations of

Islamic Banking.

Shortage of Skilled and Trained Manpower in Islamic Shariah

banking.

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Utilization of Interest Rate of fixing the Profit Margin in Bai-

Modes.

Lack of Establishment of Links with other Training Institutes

and Shariah Supervisory Bodies. Inadequate Track Record of Islamic Banking.

Absence of Islamic Inter-Bank Money Market.

Lack of Positive Response to the Requirement of government

Financing.

Failure of Islamic Banks to Finance High Return Projects.

Lack of Shariah Manual or Guidelines.

Islamic Investment Risk Analysis and measurement

Methodology.

Non-exemption of Stamp Duty for Purchasing Property by

Banks.

Lack of Co-operation between Islamic Banks and Islamic

NGOs for extending Micro-credit.

Lack of Intention of the Management to be strict with Shariah

Guidelines.

Short-term Asset Concentration in the Islamic Banks.

Working Environment.

Lack of Full-fledged Shariah Audit.

Fraud-Forgery or corruption in Islamic Banks.

Minimum Budget for Research and Development.

Lack of Uniform Operational procedure of Islamic Banking

The above problems are some of the burning problems confronting

the Islamic banks in Bangladesh. However it is felt that much

operational work and in-depth research work has to be undertaken

to allow the Islamic banks to flourish with highest quality and

strength.

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3.4 Prospects:

The prospect of Islamic Banking in Bangladesh is very bright though

its has many problems. Most of the people of Bangladesh are

Muslims and they like the Islamic Shariah based Banking. Islamic

resurgence in the twentieth century assumed proportions nobody

could afford to ignore. Whether one leaned towards a possible clash

of civilizations or hoped that interfaith dialogue would help usher in

a happy age of coexistence in the global village, Islam was there as

a major factor on the world scene. And the Islamic financial

movement happens to be one of the unique features of twentieth

century Islam.

1. New banking philosophy for the Islamic Banks:

The General Banking and Islamic banking philosophy are not same.

Islamic Banking tries to maintain Islamic philosophy. So, there

seems to be a gap between the ideals and actual practice of Islamic

banks in Bangladesh.

In their reports, booklets, bulletins and posters there banks express

their commitment to striving for establishing a just society free from

exploitation. Study shows that a little progress has been achieved so

far in that direction.

Though this failure is attributed mainly to the pervasive influence of

conventional banking system itself, lack of vigilance of the

promoters of Islamic banking in realizing the objective is no less to

blame.

2. Government and Central bank Responsibilities:

The bank Reforms Committee may be entrusted to draft an Islamic

Banking Act. Government should also allow establishment of Islamic

insurance and other subsidiary companies in order to facilitate their

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when the percentage shares of allocation of investible funds are

determined among the sectors of investment financing, profitability

of projects should be the criterion for allocating investment funds.

The criterion would be best satisfied if more and more projects werefinanced under profit loss system modes.

4. Modern banking Policies and practices:

Islamic banks, with a view to facing the growing competition either

fellow-Islamic banks or the conventional banks which have launched

Islamic banking practices, will have to adapts their functioning in

line with modern business practices, though improvement and

expansion of the range of dealing in the banking sector. Thus, it is

necessary for them to provide comprehensive banking and

investment services to clients and simultaneously to take advantage

of modern technological breakthroughs in areas such as electronic

communication, computerization etc.

6. The Islamic State and the Financial Markets:

I am not claiming that the early Islamic state left the financialmarkets alone, unsupervised and unregulated. Far from it. Like the

market as a whole, whose supervision and regulation dates back to

the Prophets time, financial markets too were monitored and

regulated to ensure they operated within the framework of the

divine guidance mentioned above. The rich literature on Hisbah

(market regulation) bears witness to that. What I mean to say is that

just as the Islamic state never took over the markets in general, itnever took over the financial markets.

Though the societys money, the payment mechanism, soon cameto be managed by the state in the same manner that it ensured

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proper weights and measures, financial practices relating toinvestment, intermediation, exchange of currencies, transfer offunds, securitization, etc. were all developed in the open market bythose engaged in the art.

7. Future Policy and Strategy:

The first action that deserves immediate attention is the promotion

of the image of Islamic banks as profit and loss system banks.

Strategies have to be carefully devised so that the image of Islamic

character and solvency as a bank is simultaneously promoted.

To this end, Pilot schemes in some very selected areas should be

started to test innovative ideas with profit-loss-sharing modes of

financing as major component. Islamic banks should clearly

demonstrate by their actions that their banking practices are guided

by profitability criterion thereby establishing that only Islamic

banking practices ensures efficient allocation of resources and

provide true market signals through PLS modes. Islamic banks

should continuously monitor and disseminate through various

means the impact of their operations on the distribution of income

primarily between the bank and the other two parties: the

depositors and the entrepreneurs, and then on different income

groups of the society. These presuppose establishment of a fully

equipped research academy in each Islamic bank.

However, Islamic finance forges a closer link between real economicactivity that creates value and financial activity that facilitates it.Islamic finance does not allow creating new risks to profit thereby.

Islamic finance is global and cosmopolitan. Having committed itselfto a text accessible to all and Prophetic precedents available easily,Islamic finance is open to any innovations that are in congruencewith its fundamentals. It is not a closed system. It has no regional,ethnic or class affiliations.

4.4 Conclusion and Recommendations:

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4.4.1 Conclusion:

Over the year Shahjalal Bank Limited (SBL) had showncommendable improvement. This is the time when only the fittestwill survive and Shahjalal Bank Limited (SBL) lags a long yardbehind from that fitness. Now the time for Shahjalal Bank Limited(SBL) to build in success they have achieved and go on with itsmission. Otherwise

Our Goal isTo be the Bank You Choose

To Bank with.

Today, Tomorrow, Everyday,Always Working for You.

Will be an illusion to them.

So, the Economic Development is not only facilitated but its pace isquickened by the appropriate development of the Investment

Management System of financial institutions & financialintermediaries in the country.

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SBL should establish security camera in its each branch.

Establishing security camera will increase the security of a

branch.

As because bank is a financial institution, the SBL should

recruit more persons, having commerce backgrounds.

Each branch should be decorated with Electronic Display

Board, which will show that which table is performing what

function and now whom is serving. The branches should be

decorated with proper Sound System facility, which will be

helpful to communicate with the clients or customers more

easily. This system will decrease the confusedness of the

customer, which ultimately will increase the efficacy of

customer service.

The decoration of Local Office should be standard.

SBL should improve its image in the society as an Islamic

Bank.

SBL should try to satisfy clients with the price charged.

Most of the customers are the age of 25-35 years and than 50

years. The SBL should target this customer to satisfy.

The availability of the ATM machine will reduce pressure over

the cash counter. So SBL should try to make available it in

each branch. At the same time they should go for huge

promotion to make it popular to the people.

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